The DSV Partnership decided to liquidate as of June 30, 20X5. Its balance sheet as of...

 

  

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The DSV Partnership decided to liquidate as of June 30, 20X5. Its balance sheet as of this date follows: DSV PARTNERSHIP Balance Sheet At June 30, 20xs Assets $ 50,000 95,000 75,000 Cash Accounts Receivable (net) Inventories Property, Plant and Equipment (net) 500,000 Total Assets $720,000 Liabilities and Partners' Capital Liabilities: Accounts Payable Partners' Capital: D, Capital s, Capital v, Capital Total Capital $405,000 $100,000 140,000 75,000 315,000 Total Liabilities and Capital $720,000 Additional Information 1. The personal assets (excluding partnership loan and capital interests) and personal liabilities of each partner as of June 30, 20X5 follow: Personal assets Personal liabilities $ 250,000 (270,000) $ (20,000) $ 450,000 (420,000) $ 30,000 $ 300,000 (240,000) $ 60,000 Personal net worth 2. The DSV Partnership was liquidated during the months of July, August, and September. The assets sold and the amounts realized follow: Month July Carrying Amount $ 50,000 60,000 400,000 $ 25,000 10,000 $ 25,000 Assets Sold Amount Realized $ 45,000 Inventories Accounts receivable (net) Property, plant and equipment 40,000 305,000 $ 18,000 4,000 $ 10,000 August Inventories Accounts receivable (net) Accounts receivable (net) Property, plant and equipment September 100, 000 45,000 Assume the following cash amounts were received during the months of July, August, and September from the sale of Dsv Partnership's noncash assets: $ 390,000 July August September 22,000 55,000 The partnership wishes to keep $10,000 of cash on hand at the end of both July and August to pay for unexpected liquidation expenses. It paid liquidation expenses of $2,500 at the end of each month, July, August, and September. D, S, and V share profits and losses in the ratio 50:30:20, respectively. Required: a. Prepare a statement as of June 30, 20X5, showing how cash will be distributed among partners as it becomes available. (Do not round your intermediate calculations. Round your final answers to nearest whole dollar.) DSV PARTNERSHIP Cash Distribution Plan June 30, 20X5 Loss Absorption Power Capital Balances D V D V Profit and loss sharing ratio % Preliquidation capital balances Loss absorption potential (LAP) Decrease highest LAP to next highest LAP: $ $ $ $ Decrease LAP to next highest level: $ Decrease LAPS by distributing cash in the P/L sharing ratio b. Prepare schedules showing how cash is distributed at the end of July, August, and September 20X5. (Do not round your intermediate calculations. Round your final answers to nearest whole dollar.) DSV PARTNERSHIP Capital Account Balances June 30, 20X5, through September 30, 20X5 Profit and loss ratio 50 % 30 % 20 % Preliquidation balances, June 30 July loss on disposal of assets and payment of liquidation costs $ 2$ July 31 distribution of available cash to partners (Sch. 1) in First layer: $ $ August loss on disposal of assets and payment of liquidation costs $ August 31 distribution of available cash to partners (Sch. 2) Remaining layer of which paid on July 31 Next layer: $ $ September loss on disposal of assets and payment of liquidation costs $ Distribution of D's deficit $ 2$ $ September 30 distribution of available cash to partners (Sch. 3) Next layer of which paid on August 31 Postliquidation balances 2$ The DSV Partnership decided to liquidate as of June 30, 20X5. Its balance sheet as of this date follows: DSV PARTNERSHIP Balance Sheet At June 30, 20xs Assets $ 50,000 95,000 75,000 Cash Accounts Receivable (net) Inventories Property, Plant and Equipment (net) 500,000 Total Assets $720,000 Liabilities and Partners' Capital Liabilities: Accounts Payable Partners' Capital: D, Capital s, Capital v, Capital Total Capital $405,000 $100,000 140,000 75,000 315,000 Total Liabilities and Capital $720,000 Additional Information 1. The personal assets (excluding partnership loan and capital interests) and personal liabilities of each partner as of June 30, 20X5 follow: Personal assets Personal liabilities $ 250,000 (270,000) $ (20,000) $ 450,000 (420,000) $ 30,000 $ 300,000 (240,000) $ 60,000 Personal net worth 2. The DSV Partnership was liquidated during the months of July, August, and September. The assets sold and the amounts realized follow: Month July Carrying Amount $ 50,000 60,000 400,000 $ 25,000 10,000 $ 25,000 Assets Sold Amount Realized $ 45,000 Inventories Accounts receivable (net) Property, plant and equipment 40,000 305,000 $ 18,000 4,000 $ 10,000 August Inventories Accounts receivable (net) Accounts receivable (net) Property, plant and equipment September 100, 000 45,000 Assume the following cash amounts were received during the months of July, August, and September from the sale of Dsv Partnership's noncash assets: $ 390,000 July August September 22,000 55,000 The partnership wishes to keep $10,000 of cash on hand at the end of both July and August to pay for unexpected liquidation expenses. It paid liquidation expenses of $2,500 at the end of each month, July, August, and September. D, S, and V share profits and losses in the ratio 50:30:20, respectively. Required: a. Prepare a statement as of June 30, 20X5, showing how cash will be distributed among partners as it becomes available. (Do not round your intermediate calculations. Round your final answers to nearest whole dollar.) DSV PARTNERSHIP Cash Distribution Plan June 30, 20X5 Loss Absorption Power Capital Balances D V D V Profit and loss sharing ratio % Preliquidation capital balances Loss absorption potential (LAP) Decrease highest LAP to next highest LAP: $ $ $ $ Decrease LAP to next highest level: $ Decrease LAPS by distributing cash in the P/L sharing ratio b. Prepare schedules showing how cash is distributed at the end of July, August, and September 20X5. (Do not round your intermediate calculations. Round your final answers to nearest whole dollar.) DSV PARTNERSHIP Capital Account Balances June 30, 20X5, through September 30, 20X5 Profit and loss ratio 50 % 30 % 20 % Preliquidation balances, June 30 July loss on disposal of assets and payment of liquidation costs $ 2$ July 31 distribution of available cash to partners (Sch. 1) in First layer: $ $ August loss on disposal of assets and payment of liquidation costs $ August 31 distribution of available cash to partners (Sch. 2) Remaining layer of which paid on July 31 Next layer: $ $ September loss on disposal of assets and payment of liquidation costs $ Distribution of D's deficit $ 2$ $ September 30 distribution of available cash to partners (Sch. 3) Next layer of which paid on August 31 Postliquidation balances 2$

Answer rating: 100% (QA)

Required solution 1 Statement of Partnership Realization and Liquidation Particulars Cash Noncash As... View the full answer